4
2010
S&P Futures Hit 1100 in Confirmation Rally
The S&P futures gave bulls the confirmation rally they were looking for on Friday as the futures reached their highly psychological 1100 level in reaction to stronger than expected employment data. Non-farm payrolls came in at -54k vs. -101k eyed amid a considerable improvement in private sector hiring. Abnormally high unemployment has been the sore thumb in America’s recovery from crisis lows and any signs of improvement bode well for U.S. equities. Meanwhile, Obama plans to announce a new round of measures aimed at boosting the economy ahead of November elections as we head into Labor Day weekend. That being said, equities could be heavily influenced by psychological forces after investors return for the 3-day weekend. Additionally, investors should take note of the new M&A activity taking place after Burger King announced it will be purchased by a private equity firm. Should M&A activity continue to heat up this could be a sign of a bottom and the beginning of a new uptrend. However, while investors did undergo a brisk turnaround in sentiment last week, we should take note that headwinds are still blowing around the global economy and the recovery is standing on uneven ground. Hence, investors should keep an eye out for negative psychological developments should they wade back into the risk trade. In all, we have to say the S&P futures have defended our aforementioned long-term uptrend line very well and the uptrend is clearly back in play. That being said, we’ll have to see how the S&P futures deal with 1100 amid a relatively quiet week on the data wire.
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Posted by: Matthew Myers
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